UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2008

OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                  

Commission file number: 0-16190

DEL TACO RESTAURANT PROPERTIES II

(A California limited partnership)

(Exact name of registrant as specified in its charter)

California (State or other jurisdiction of incorporation or organization)	33-0064245 (I.R.S. Employer Identification Number)
25521 Commercentre Drive Lake Forest, California (Address of principal executive offices)	92630 (Zip Code)

Registrant’s telephone number, including area code: (949) 462-9300

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes      No  X 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes      No  X 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  X   No    

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Form S-11 Registration Statement filed July 10, 1984 are incorporated by reference into Part IV of this report.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No  X 

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 1A. Risk Factors
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for the Partnership’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
	Item 9A(T). Controls and Procedures
	Item 9B. Other Information
PART III
	Item 10. Directors, Executive Officers, and Corporate Governance
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships, Related Transactions, and Director Independence
	Item 14. Principal Accountant Fees and Services
PART IV
SIGNATURES
EXHIBIT INDEX
EX-31.1
EX-31.2
EX-32.1

PART I

Item 1. Business

Del Taco Restaurant Properties II (the Partnership, us, we or our) is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act. The Partnership’s General Partner is Del Taco LLC, a California limited liability company (Del Taco or the General Partner). The Partnership sold 27,006 units totaling $6.751 million through an offering of limited partnership units from September 1984 through December 1985. The term of the partnership agreement is until April 30, 2025, unless terminated earlier by means provided in the partnership agreement.

The business of the Partnership is ownership and leasing of restaurants in California to Del Taco. The Partnership acquired land and constructed seven Mexican-American restaurants for long-term lease to Del Taco. Two restaurants were sold in 1994. Each property is leased for 35 years on a triple net basis. Rent is equal to twelve percent of gross sales of the restaurants. As of December 31, 2008, the Partnership had a total of five properties leased to Del Taco.

The Partnership has no full time employees. The Partnership agreement assigns full authority for general management and supervision of the business affairs of the Partnership to the General Partner. The General Partner has a one percent interest in the profits or losses and distributions of the Partnership. Limited partners have no right to participate in the day to day management or conduct of the Partnership’s business affairs.

Item 1A. Risk Factors

None.

2

Item 2. Properties

The Partnership acquired seven properties with proceeds obtained from the sale of partnership units:

				Date of
		Date of	Restaurant	Commencement
Address	City, State	Acquisition	Constructed	of Operation (1)
Bear Valley Road	Victorville, CA	February 4, 1986	60 seat with drive through service window	June 13, 1986
West Valley Boulevard	Colton, CA	March 11, 1986	60 seat with drive through service window	June 24, 1986
Palmdale Boulevard	Palmdale, CA	December 12, 1986	60 seat with drive through service window	May 7, 1987
South Gate Town Center	South Gate, CA	January 28, 1987	60 seat with drive through service window	May 28, 1987 (2)
Main Avenue	Fallbrook, CA	March 10, 1987	60 seat with drive through service window	August 19, 1987 (3)
De Anza Country Shopping Center	Pedley, CA	April 13, 1987	60 seat with drive through service window	October 28, 1987
Varner Road	Thousand Palms, CA	October 14, 1987	60 seat with drive through service window	April 28, 1988

See also Schedule III — Real Estate and Accumulated Depreciation included in Item 8.

(1)	Commencement of operation is the first date Del Taco, as lessee, operated the facility on the site as a Del Taco restaurant.
(2)	In May 1994, the South Gate property was sold yielding net proceeds to the Partnership of $497,202.
(3)	In November 1994, the Fallbrook property was sold yielding net proceeds to the Partnership of $357,531.

Item 3. Legal Proceedings

The Partnership is not a party to any material pending legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

None.

3

PART II

Item 5. Market for the Partnership’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities

The Partnership sold 27,006 ($6,751,500) limited partnership units during the public offering period ended December 31, 1985 and currently has 968 limited partners of record. There is no public market for the trading of the units. Distributions made by the Partnership to the limited partners during the past three fiscal years are described in Note 6 to the Notes to the Financial Statements contained under Item 8.

Item 6. Selected Financial Data

The selected financial data presented as of and for the years ended December 31, 2008, 2007, 2006, 2005, and 2004, has been derived from the audited financial statements and should be read in conjunction with the financial statements and related notes and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Years ended December 31,
	2008		2007		2006		2005		2004
Rental revenues	$	547,191	$	584,595	$	631,571	$	690,925	$	665,398
General and administrative expense		75,327		76,924		73,986		73,237		71,316
Depreciation expense		35,396		38,057		54,180		54,180		54,180
Interest and other income		5,885		5,156		4,584		4,471		3,418
Net income		442,353		474,770		507,989		567,979		543,320
Net income per limited partnership unit		16.22		17.40		18.62		20.82		19.92
Cash distributions per limited partnership unit		17.98		19.34		21.58		22.60		21.84
Total assets		2,098,078		2,145,392		2,206,089		2,276,807		2,330,405
Long-term obligations		—		—		—		—		—

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition, results of operations, liquidity and capital resources, and off balance sheet arrangements and contractual obligations contained within this report on Form 10-K is more clearly understood when read in conjunction with the notes to the financial statements. The notes to the financial statements elaborate on certain terms that are used throughout this discussion and provide information about the Partnership and the basis of presentation used in this report on Form 10-K.

4

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued)

The five restaurants leased to Del Taco make up all of the income producing assets of the Partnership. Therefore, the business of the Partnership is entirely dependent on the success of Del Taco as the operator of the restaurants located at our properties. The success of the restaurants is dependent on a large variety of factors, including, but not limited to, consumer demand and preference for fast food, in general, and for Mexican-American food in particular.

Liquidity and Capital Resources

Del Taco Restaurant Properties II (the Partnership or the Company) offered limited partnership units for sale between September 1984 and December 1985. In total, $6.751 million was raised through the sale of limited partnership units and used to acquire sites, build seven restaurants, pay commissions to brokers and to reimburse Del Taco LLC (the General Partner or Del Taco) for offering costs incurred. Two restaurants were sold in 1994.

The Partnership’s only source of cash flow is rental income from the properties from the triple net leases. Such operating income has historically been and is expected to continue to be sufficient to fund the Partnership’s operating expenses. Net cash provided by operating activities in excess of the Partnership’s ongoing needs is distributed to the partners.

Off Balance Sheet Arrangements and Contractual Obligations

None.

Results of Operations

The Partnership owned seven properties that were under long-term lease to Del Taco for restaurant operations. Two restaurants were sold in 1994 and five are currently operating.

5

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued)

Results of Operations — (Continued)

The following table sets forth rental revenues earned by restaurant by year:

	Years Ended December 31,
	2008		2007		2006
Bear Valley Rd., Victorville, CA	$	96,785	$	98,013	$	113,030
West Valley Blvd., Colton, CA		129,665		128,669		139,412
Palmdale Blvd., Palmdale, CA		65,355		72,370		77,025
DeAnza Country Shopping Center, Pedley, CA		123,082		146,570		140,832
Varner Road, Thousand Palms, CA		132,304		138,973		161,272
Total	$	547,191	$	584,595	$	631,571

The Partnership earns rental revenues equal to 12 percent of gross sales from the restaurants. The Partnership earned rental revenues of $547,191 during the year ended December 31, 2008, which represents a decrease of $37,404 from 2007. The decrease in rental revenues was caused by a decrease in sales at the restaurants under lease due to local competitive and industry factors.

The Partnership earned rental revenues of $584,595 during the year ended December 31, 2007, which represents a decrease of $46,976 from 2006. The decrease in rental revenues was caused by a decrease in sales at the restaurants under lease due to local competitive and industry factors.

The following table breaks down general and administrative expenses by type of expense:

	Percentage of Total General and Administrative Expense
	Years Ended December 31,
	2008			2007			2006
Accounting fees		63.97	%		61.09	%		59.55	%
Distribution of information to limited partners		34.96			37.85			39.16
Other		1.08			1.06			1.29
		100.00			100.00			100.00

General and administrative costs decreased by $1,597 from 2007 to 2008. The decrease was caused primarily by decreased costs for printing and distribution of information to partners.

General and administrative costs increased by $2,938 from 2006 to 2007. The increase was caused primarily by increased costs for accounting fees.

6

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued)

Results of Operations — (Continued)

Depreciation expense decreased by $2,661 and $16,123 in 2008 and 2007 as certain land improvements became fully depreciated.

Net income decreased by $32,417 from 2007 to 2008 due to the decreases in revenues of $37,404 offset by the increase in other income of $729, the $1,597 decrease in general and administrative expenses and the decrease in depreciation expense of $2,661.

Net income decreased by $33,219 from 2006 to 2007 due to the decreases in revenues of $46,976 and the $2,938 increase in general and administrative expenses offset by the increase in other income of $572 and the decrease in depreciation expense of $16,123.

Recent Accounting Pronouncements

None that applies to the Partnership.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations, as well as disclosures included elsewhere in this report on Form 10-K are based upon the Partnership’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Partnership believes the critical accounting policies that most impact the financial statements are described below. A summary of the significant accounting policies of the Partnership can be found in Note 1 to the Financial Statements which is included in Item 8 of this Form 10-K.

Revenue Recognition: Rental revenue is recognized based on 12 percent of gross sales of the restaurants for the corresponding period, and is earned at the point of sale.

7

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued)

Property and Equipment: Property and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives which are 20 years for land improvements, 35 years for buildings and improvements, and 10 years for machinery and equipment.

The Partnership accounts for property and equipment in accordance with Statement of Financial Accounting Standards No. (SFAS) 144, “Accounting for the Impairment or Disposal of Long Lived Assets.” SFAS 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In evaluating long-lived assets held for use, an impairment loss is recognized if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying value of the asset. Once a determination has been made that an impairment loss should be recognized for long-lived assets, various assumptions and estimates are used to determine fair value including, among others, recent sales of comparable properties and the opinions of fair value prepared by independent real estate appraisers. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

None.

8

Item 8. Financial Statements and Supplementary Data

PART I. INFORMATION

INDEX	PAGE NUMBER
Report of Independent Registered Public Accounting Firm - Squar, Milner, Peterson, Miranda & Williamson, LLP		10
Balance Sheets at December 31, 2008 and 2007		11
Statements of Income for the years ended December 31, 2008, 2007 and 2006		12
Statements of Partners’ Equity for the years ended December 31, 2008, 2007 and 2006		13
Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006		14
Notes to Financial Statements		15-19
Schedule III — Real Estate and Accumulated Depreciation		26

9

Report of Independent Registered Public Accounting Firm

To the Partners
Del Taco Restaurant Properties II:

We have audited the accompanying balance sheets of Del Taco Restaurant Properties II (a California Limited Partnership) as of December 31, 2008 and 2007 and the related statements of income, partners’ equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule of the Partnership listed in Item 15. These financial statements and financial statement schedule are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Del Taco Restaurant Properties II as of December 31, 2008 and 2007 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We were not engaged to examine management’s assessment of the effectiveness of Del Taco Restaurant Properties II’s internal control over financial reporting as of December 31, 2008 included in the accompanying Management’s report on internal control over financial reporting under Item 9A(T) and, accordingly, we do not express an opinion thereon.

/s/ Squar, Milner, Peterson, Miranda & Williamson, LLP

Newport Beach, California

March 2, 2009

10

DEL TACO RESTAURANT PROPERTIES II

BALANCE SHEETS

	December 31,
	2008			2007
ASSETS
CURRENT ASSETS:
Cash	$	160,340		$	170,340
Receivable from Del Taco LLC		43,520			45,631
Deposits		1,727			1,534
Total current assets		205,587			217,505
PROPERTY AND EQUIPMENT:
Land and improvements		1,806,006			1,806,006
Buildings and improvements		1,238,879			1,238,879
Machinery and equipment		898,950			898,950
		3,943,835			3,943,835
Less—accumulated depreciation		2,051,344			2,015,948
		1,892,491			1,927,887
	$	2,098,078		$	2,145,392
LIABILITIES AND PARTNERS’ EQUITY
CURRENT LIABILITIES:
Payable to limited partners	$	35,651		$	35,481
Accounts payable		14,655			13,994
Total current liabilities		50,306			49,475
PARTNERS’ EQUITY AT DECEMBER 31, 2008 AND 2007:
Limited partners; 27,006 units outstanding at December 31, 2008 and December 31, 2007		2,076,346			2,124,009
General partner-Del Taco LLC		(28,574	)		(28,092	)
		2,047,772			2,095,917
	$	2,098,078		$	2,145,392

See accompanying notes to financial statements.

11

DEL TACO RESTAURANT PROPERTIES II

STATEMENTS OF INCOME

	Years Ended December 31,
	2008		2007		2006
RENTAL REVENUES	$	547,191	$	584,595	$	631,571
EXPENSES:
General and administrative		75,327		76,924		73,986
Depreciation		35,396		38,057		54,180
		110,723		114,981		128,166
Operating income		436,468		469,614		503,405
OTHER INCOME:
Interest		1,085		3,131		3,334
Other		4,800		2,025		1,250
Net income	$	442,353	$	474,770	$	507,989
Net income per limited partnership unit (note 2)	$	16.22	$	17.40	$	18.62
Number of limited partnership units used in computing per unit amounts		27,006		27,006		27,006

See accompanying notes to financial statements.

12

DEL TACO RESTAURANT PROPERTIES II

STATEMENTS OF PARTNERS’ EQUITY

Years Ended December 31, 2008, 2007, and 2006

	Limited Partners					General
	Units		Amount			Partner			Total
Balance, December 31, 2005		27,006	$	2,256,236		$	(26,755	)	$	2,229,481
Net Income		—		502,909			5,080			507,989
Cash Distributions		—		(582,766	)		(5,887	)		(588,653	)
Balance, December 31, 2006		27,006		2,176,379			(27,562	)		2,148,817
Net Income		—		470,023			4,747			474,770
Cash Distributions		—		(522,393	)		(5,277	)		(527,670	)
Balance, December 31, 2007		27,006		2,124,009			(28,092	)		2,095,917
Net Income		—		437,930			4,423			442,353
Cash Distributions		—		(485,593	)		(4,905	)		(490,498	)
Balance, December 31, 2008		27,006	$	2,076,346		$	(28,574	)	$	2,047,772

See accompanying notes to financial statements.

13

DEL TACO RESTAURANT PROPERTIES II

STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	442,353		$	474,770		$	507,989
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		35,396			38,057			54,180
Changes in operating assets and liabilities:
Receivable from Del Taco LLC		2,111			3,418			7,654
Deposits		(193	)		152			(686	)
Payable to limited partners		170			(6,679	)		5,345
Accounts payable		661			(1,118	)		4,601
Net cash provided by operating activities		480,498			508,600			579,083
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners		(490,498	)		(527,670	)		(588,653	)
Net decrease in cash		(10,000	)		(19,070	)		(9,570	)
Beginning cash balance		170,340			189,410			198,980
Ending cash balance	$	160,340		$	170,340		$	189,410

See accompanying notes to financial statements.

14

DEL TACO RESTAURANT PROPERTIES II

NOTES TO FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Partnership: Del Taco Restaurant Properties II, a California limited partnership (the Partnership), was formed on June 20, 1984, for the purpose of acquiring real property in California for construction of seven Mexican-American restaurants to be leased under long-term agreements to Del Taco LLC (General Partner or Del Taco), for operation under the Del Taco trade name. The South Gate and Fallbrook properties were sold on May 18, 1994 and November 30, 1994, respectively. The term of the partnership agreement is until April 30, 2025 unless terminated earlier by means provided in the partnership agreement.

The Partnership has no full time employees (see Note 4). The Partnership agreement assigns full authority for general management and supervision of the business affairs of the Partnership to the General Partner. The General Partner has a one percent interest in the profits or losses and distributions of the Partnership. Limited partners have no right to participate in the day to day management or conduct of the Partnership’s business affairs.

Distributions are made to the general and limited partners in accordance with the provisions of the Partnership agreement (see Note 2).

Basis of Accounting: The Partnership utilizes the accrual method of accounting for transactions relating to the business of the Partnership. The summary of significant accounting policies presented below is designed to assist in understanding the Partnership’s financial statements. Such financial statements and accompanying notes are the representations of the Partnership’s management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements.

Property and Equipment: Property and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives which are 20 years for land improvements, 35 years for buildings and improvements, and 10 years for machinery and equipment.

The Partnership accounts for property and equipment in accordance with Statement of Financial Accounting Standards No. (SFAS) 144, “Accounting for the Impairment or Disposal of Long Lived Assets.” SFAS 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In evaluating long-lived assets held for use, an impairment loss is recognized if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying value of the asset. Once a determination has been made that an impairment loss should be recognized for long-lived assets, various assumptions and estimates are used to determine fair value including, among others, recent sales of comparable properties and the opinions of fair value prepared by independent real estate appraisers. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Income Taxes: No provision has been made for federal or state income taxes on partnership net income, since the Partnership is not subject to income tax. Partnership income is includable in the taxable income of the individual partners as required under applicable income tax laws. Certain items, primarily related to depreciation methods, are accounted for differently for income tax reporting purposes (see Note 5).

15

DEL TACO RESTAURANT PROPERTIES II
NOTES TO FINANCIAL STATEMENTS — CONTINUED

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (Continued)

Net Income Per Limited Partnership Unit: Net income per limited partnership unit is based on net income attributable to the limited partners (after 1% allocation to the general partner) using the weighted average number of units outstanding during the periods presented which amounted to 27,006 units for all years presented.

Use of Estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Revenue Recognition: Rental revenue is recognized based on 12 percent of gross sales of the restaurants for the corresponding period, and is earned at the point of sale.

Concentration of Risk: The five restaurants leased to Del Taco make up all of the income producing assets of the Partnership and contributed all of the Partnership’s rental revenues for the three years ended December 31, 2008. Therefore, the business of the Partnership is entirely dependent on the success of the Del Taco trade name restaurants that lease the properties.

The Partnership maintains substantially all of its cash and cash equivalents at one major commercial bank. The Federal Depository Insurance Commission’s limits were $250,000 and $100,000 at December 31, 2008 and 2007, respectively. At December 31, 2008 and 2007, the Partnership had approximately $174,000 and $191,000, respectively, on deposit at one financial institution.

Fair Value of Financial Instruments: The fair values of cash, accounts receivables, deposits, accounts payable and payables to limited partners approximate the carrying amounts due to their short maturities.

NOTE 2 — PARTNERS’ EQUITY

Pursuant to the partnership agreement, annual partnership income or loss is allocated one percent to Del Taco and 99 percent to the limited partners. Partnership gains from any sale or refinancing will be allocated one percent to the General Partner and 99 percent to the limited partners until allocated gains and profits equal losses, distributions and syndication costs previously allocated. Additional gains will be allocated 15 percent to the General Partner and 85 percent to the limited partners.

NOTE 3 — LEASING ACTIVITIES

The Partnership leases certain properties for operation of restaurants to Del Taco on a triple net basis. The leases are for terms of 35 years commencing with the completion of the restaurant facility located on each property and require monthly rentals equal to 12 percent of the gross sales of the restaurants. The leases expire in the years 2021 to 2022. There is no minimum rental under any of the leases. The Partnership had a total of five properties leased as of December 31, 2008, 2007, and 2006.

The five restaurants operated by Del Taco, for which the Partnership is the lessor, had combined, unaudited sales of $4,559,922, $4,871,629, and $5,263,092 and unaudited net losses of $473,380 and $111,321 for the years ended December 31, 2008 and 2007, respectively, and unaudited net income of $143,739 for the year ended December 31, 2006. Del Taco net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense and the decrease in net income from the corresponding period of the prior year primarily relates to additional interest expense from the debt that was issued in connection with the acquisition of Del Taco (see Note 9) as well as increased food commodity, labor and energy costs.

16

DEL TACO RESTAURANT PROPERTIES II
NOTES TO FINANCIAL STATEMENTS — CONTINUED

NOTE 4 — RELATED PARTIES

The receivable from Del Taco consists of rent accrued for the month of December 2008 and 2007. The rent receivable was collected in January 2009 and 2008.

The General Partner received $4,905, $5,277 and $5,887 in distributions relating to its one percent interest in the Partnership for the years ended December 31, 2008, 2007 and 2006, respectively.

Del Taco serves in the capacity of General Partner in other partnerships which are engaged in the business of operating restaurants, and three other partnerships which were formed for the purpose of acquiring real property in California for construction of Mexican-American restaurants for lease under long-term agreements to Del Taco for operation under the Del Taco trade name.

The General Partner provides certain minimal managerial and accounting services to the Partnership at no cost.

NOTE 5 — INCOME TAXES (UNAUDITED)

The Partnership is not subject to income taxes because its income is taxed directly to the General Partner and limited partners. The reconciling items presented in the table below are the only items that create a difference between the tax basis and reported amounts of the Partnership’s assets and liabilities.

A reconciliation of financial statement net income to taxable income for each of the periods is as follows:

	2008		2007		2006
Net income per financial statements	$	442,353	$	474,770	$	507,989
Excess book depreciation		3,777		6,438		22,561
Taxable income	$	446,130	$	481,208	$	530,550

A reconciliation of partnership equity per the financial statements to partners’ equity for tax purposes as of December 31, 2008, is as follows (unaudited):

Partners’ equity per financial statements	$	2,047,772
Issue costs of limited partnership units capitalized for tax purposes		986,745
Difference in book vs. tax depreciation		119,533
Writedown of real estate previously held for sale		161,963
Other		5,465
Partners’ equity for tax purposes	$	3,321,478

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DEL TACO RESTAURANT PROPERTIES II
NOTES TO FINANCIAL STATEMENTS — CONTINUED

NOTE 6 — CASH DISTRIBUTIONS TO LIMITED PARTNERS

Cash distributions to limited partners for the three years ended December 31, 2008 were as follows:

	Cash		Weighted		Number of Units
	Distribution per		Average Number		Outstanding at
	Limited Partnership		of Units		the End of
Quarter Ended	Unit		Outstanding		Quarter
December 31, 2005	$	5.76		27,006		27,006
March 31, 2006		5.03		27,006		27,006
June 30, 2006		5.14		27,006		27,006
September 30, 2006		5.65		27,006		27,006
Total paid in 2006	$	21.58
December 31, 2006	$	5.21		27,006		27,006
March 31, 2007		4.54		27,006		27,006
June 30, 2007		4.24		27,006		27,006
September 30, 2007		5.35		27,006		27,006
Total paid in 2007	$	19.34
December 31, 2007	$	4.76		27,006		27,006
March 31, 2008		3.83		27,006		27,006
June 30, 2008		4.75		27,006		27,006
September 30, 2008		4.64		27,006		27,006
Total paid in 2008	$	17.98

Cash distributions per limited partnership unit were calculated based upon the weighted average units outstanding for each quarter and were paid from operations. Distributions declared in January 2009, for the quarter ended December 31, 2008, amounted to $4.39 per limited partnership unit and were paid in January 2009.

NOTE 7 — RESULTS BY QUARTER (UNAUDITED)

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Year ended December 31, 2008
Rental revenues	$	135,036	$	142,998	$	138,200	$	130,957
Net income		85,642		125,081		120,368		111,262
Net income per limited partnership unit		3.14		4.59		4.41		4.08
Year ended December 31, 2007
Rental revenues	$	143,796	$	150,528	$	149,224	$	141,047
Net income		92,888		130,684		128,206		122,992
Net income per limited partnership unit		3.41		4.79		4.70		4.50

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DEL TACO RESTAURANT PROPERTIES II
NOTES TO FINANCIAL STATEMENTS — CONTINUED

NOTE 8 — PAYABLE TO LIMITED PARTNERS

Payable to limited partners represents a reclassification from cash for distribution checks made to limited partners that have remained outstanding for six months or longer.

NOTE 9 — ACQUISITION OF GENERAL PARTNER

On January 30, 2006, the parent company of the General Partner entered into an agreement to sell all of its issued and outstanding common stock to Sagittarius Brands, Inc. The transaction was consummated on March 29, 2006 and did not have an impact on the financial position, results of operations or cash flows of the Partnership.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None

Item 9A(T). Controls and Procedures

Disclosure controls and procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Treasurer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In connection with the preparation of this Annual Report on Form 10-K, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Treasurer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Treasurer, as appropriate, to allow timely decisions regarding required disclosures.

Internal control over financial reporting

(a) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making its assessment of internal control over financial reporting, management used the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Management has concluded that, as of December 31, 2008, our internal control over financial reporting was effective based on these criteria.

This annual report does not include an attestation report of the Partnership’s registered public accounting firm regarding the effectiveness of internal control over financial reporting. Pursuant to temporary rules of the Securities and Exchange Commission, such attestation report is not required to be included in this filing; the Partnership is only required to provide management’s report in this annual report.

(b) Changes in internal controls:

There were no significant changes in the Partnership’s internal controls over financial reporting that occurred during our most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

     None.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance

(a) & (b) Del Taco serves as the Partnership’s sole general partner. Individuals who perform the functions of directors and officers of the Partnership consist of the following officers of Del Taco:

Name	Title	Age
Paul J.B. Murphy, III	Chief Executive Officer	54
James W. Lyons	Chief Development Officer	53
James D. Stoops	Executive Vice President, Operations	56
Janet D. Erickson	Executive Vice President, Purchasing	52
Steven L. Brake	Treasurer	36

Del Taco’s term as general partner will continue indefinitely, subject to the right of a majority in interest of the limited partners to remove and replace it. The above referenced officers of the General Partner will hold office until their resignation or the election or appointment of their successor.

(c)	None
(d)	No family relationship exists between any such officer of the General Partner.
(e)	The following is an account of the business experience during the past five years of each such officer:

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Paul J.B. Murphy, III, Chief Executive Officer of Del Taco LLC. Mr. Murphy has served as Chief Executive Officer since February of 2009. He previously served as President and Chief Executive Officer of Einstein Noah Restaurant Group, Inc. (formerly, New World Restaurant Group, Inc.) from October of 2003 to December of 2008.

James W. Lyons, Chief Development Officer of Del Taco LLC. Mr. Lyons has served as Chief Development Officer since September of 2008. He previously served as Chief Operating Officer of Popeyes Chicken and Biscuits (a division of AFC Enterprises, Inc.), from March of 2007 to December of 2007, and as Chief Development Officer of Popeyes Chicken and Biscuits from July of 2004 to March of 2007. Prior to that, he served as Vice President of Development for Domino’s Pizza from 2002 to July of 2004.

James D. Stoops, Executive Vice President, Operations of Del Taco LLC. From 1968 to 1991, Mr. Stoops served in a wide variety of operations positions with Burger King Corporation with increasing levels of responsibility. In 1985, Mr. Stoops was appointed Region Vice President/General Manager for the New York region and served in that position until October of 1990. In January of 1991, he joined Del Taco, Inc. in his current post.

Janet D. Erickson, Executive Vice President, Purchasing of Del Taco LLC. From 1979 to 1986, Ms. Erickson was with Denny’s Incorporated. She served in the Research and Development department in a variety of positions until 1982 when she was promoted to the position of Purchasing Agent. Ms. Erickson was hired in 1986 as Manager of Contract Purchasing with Carl Karcher Enterprises, a post she held until March 1990 when she became Vice President, Purchasing for Del Taco, Inc. Ms. Erickson has a Bachelor of Science degree in Foods and Nutrition from Cal State Polytechnic University in Pomona, California.

Steven L. Brake, Vice President, Treasurer and Controller of Del Taco LLC. Mr. Brake has been Treasurer since March 2007 and previously served as the Corporate Controller of Del Taco LLC from September 2003 to March of 2007. From December 1995 until September 2003 Mr. Brake spent seven years with Arthur Andersen and one year with KPMG LLP in their respective audit departments. Mr. Brake is a licensed certified public accountant and holds a Bachelor of Arts degree in Economics from the University of California, Irvine and an MBA from the Paul Merage School of Business at the University of California, Irvine.

Code of Ethics

The Partnership has no executive officers or any fulltime employees and, accordingly, has not adopted a code of ethics.

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Item 11. Executive Compensation

The Partnership has no executive officers or directors and pays no direct remuneration to any executive officer or director of its General Partner. The Partnership has not issued any options or stock appreciation rights to any executive officer or director of its General Partner, nor does the Partnership propose to pay any annuity, pension or retirement benefits to any executive officer or director of its General Partner. The Partnership has no plan, nor does the Partnership presently propose a plan, which will result in any remuneration being paid to any executive officer or director of the General Partner upon termination of employment.

Item 12. Security Ownership of Certain Beneficial Owners and Management

(a)	No person of record currently owns more than five percent of limited partnership units of the Partnership, nor was any person known of by the Partnership to own of record and beneficially, or beneficially only, more than five percent of such securities.
(b)	Neither Del Taco LLC, nor any executive officer or director of Del Taco LLC, owns any limited partnership units of the Partnership.
(c)	The Partnership knows of no contractual arrangements, the operation or the terms of which may at a subsequent date result in a change in control of the Partnership, except for provisions in the Partnership agreement providing for removal of the General Partner by holders of a majority of the limited partnership units and if a material event of default occurs under the financing agreements of the General Partner.

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Item 13. Certain Relationships, Related Transactions, and Director Independence

(a)	No transactions have occurred between the Partnership and any executive officer or director of its General Partner.
	During 2008, the following transactions occurred between the Partnership and the General Partner pursuant to the terms of the partnership agreement.

(1)	The General Partner earned $4,423 as its one percent share of the net income of the Partnership.
(2)	The General Partner received $4,905 in distributions relating to its one percent interest in the Partnership.

(b)	During 2008, the Partnership had no business relationships with any entity of a type required to be reported under this item.
(c)	Neither the General Partner, any director or officer of the General Partner, or any associate of any such person, was indebted to the Partnership at any time during 2008 for any amount.
(d)	Not applicable.

Item 14. Principal Accountant Fees and Services

The following table presents fees for professional services rendered by Squar, Milner, Peterson, Miranda & Williamson, LLP (Squar Milner).

	2008		2007
Audit Fees	$	17,779	$	14,330
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	17,779	$	14,330

The General Partner approves all the audit and non-audit services, and related fees, provided to the Partnership by the independent auditors prior to the services being rendered.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1)	Financial Statements
	Included in Part II of this report:
	Report of Independent Registered Public Accounting Firm - Squar, Milner, Peterson, Miranda & Williamson, LLP
	Balance Sheets
	Statements of Income
	Statements of Partners’ Equity
	Statements of Cash Flows
	Notes to Financial Statements
(a)(2)	Financial Statement Schedule
	Schedule III — Real Estate and Accumulated Depreciation
	Financial statement schedules other than those referred to above have been omitted because they are not applicable or not required.
(b)	Reports on Form 8-K
	None
(c)	Exhibits required by Item 601 of Regulation S-K:

1.	Incorporated herein by reference, Agreement of Limited Partnership of Del Taco Restaurant Properties II filed as Exhibit 3.01 to Partnership’s Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on July 10, 1984.
2.	Incorporated herein by reference, Amendment to Agreement of Limited Partnership of Del Taco Restaurant Properties II.
3.	Incorporated herein by reference, Form of Standard Lease to be entered into by partnership and Del Taco, Inc., as lessee, filed as Exhibit 10.02 to Partnership’s Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on July 10, 1984.
31.1	Paul J.B. Murphy, III’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Steven L. Brake’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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DEL TACO RESTAURANT PROPERTIES II
SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2008

							Cost capitalized		Gross amount at
			Initial cost				subsequent to		which carried at
			to company				acquisition		close of period								Life on which
			Land		Buildings &				Land, Buildings &								depreciation in latest
Description			& land		Improve-		Carrying		improvements		Accumulated		Date of		Date		income statement
(All Restaurants)	Encumbrances		improvements		ments		costs		Total		depreciation		construction		acquired		is computed
Victorville, CA	$	—	$	327,770	$	224,843	$	—	$	552,613	$	209,146		1986		1986	20(LI), 35 (BI)
Colton, CA		—		262,661		180,179		—		442,840		167,603		1986		1986	20(LI), 35 (BI)
Palmdale, CA		—		404,791		277,677		—		682,468		258,296		1986		1986	20(LI), 35 (BI)
Pedley, CA		—		364,334		249,925		—		614,259		232,479		1987		1987	20(LI), 35 (BI)
Thousand Palms, CA		—		446,450		306,255		—		752,705		284,869		1987		1987	20(LI), 35 (BI)
	$	—	$	1,806,006	$	1,238,879	$	—	$	3,044,885	$	1,152,393

			Accumulated
	Restaurants		Depreciation
Balances at December 31, 2005:	$	3,044,885	$	1,024,760
Additions		—		54,180
Retirements		—		—
Balances at December 31, 2006:		3,044,885		1,078,940
Additions		—		38,057
Retirements		—		—
Balances at December 31, 2007:		3,044,885		1,116,997
Additions		—		35,396
Retirements		—		—
Balances at December 31, 2008:	$	3,044,885	$	1,152,393

The aggregate cost basis of Del Taco Restaurant Properties II real estate assets for Federal income tax purposes was $2,188,770 at December 31, 2008.

See accompanying report of independent registered public accounting firm.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DEL TACO RESTAURANT PROPERTIES II
	a California limited partnership
	Del Taco LLC
	General Partner
Date March 11, 2009	Paul J.B. Murphy, III Paul J.B. Murphy, III
	Chief Executive Officer
Date March 11, 2009	James W. Lyons James W. Lyons
	Chief Development Officer
Date March 11, 2009	Steven L. Brake Steven L. Brake
	Treasurer

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EXHIBIT INDEX

Exhibit	Description
1.	Incorporated herein by reference, Agreement of Limited Partnership of Del Taco Restaurant Properties II filed as Exhibit 3.01 to Partnership’s Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on July 10, 1984.
2.	Incorporated herein by reference, Amendment to Agreement of Limited Partnership of Del Taco Restaurant Properties II.
3.	Incorporated herein by reference, Form of Standard Lease to be entered into by partnership and Del Taco, Inc., as lessee, filed as Exhibit 10.02 to Partnership’s Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on July 10, 1984.
31.1	Paul J.B. Murphy, III Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Steven L. Brake’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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